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permit colored oleo without the present regulatory laws would invite widespread substitution of an inexpensive yellow imitation for a genuine product. Among the thousands of handlers of oleo-in warehouses, trucks, stores, restaurants and elsewhere-there would be those who could not resist this lure of easy money.
3. Repeal of the laws would seriously damage an important segment of American agriculture and threaten the Nation's dietary standards. Uncontrolled and ruthless competition of a low-cost product in almost identical imitation of butter would hurt butter prices and drive many farmers out of dairying. Unfortunately those who say, "Let the consumers drink milk," do not have the answer to this dilemma. To have enough milk to meet fluid demands in the slack season requires more than enough milk in the flush season. Some of this excess must go into butter. Without a butter outlet farmers would cut their herds toward the point where there would be insufficient fluid milk in the slack season. Cattle numbers would continue to decline. In the final analysis the question is whether America is to continue its meat and milk-products diet, or revert largely to a grain and field-crop subsistence.
4. Oleomargarine is not entitled to the color yellow. The claim that oleo has as much right as butter to the color yellow is false. Oleo in this country is produced from the oils of cottonseed and soybeans. The oleo industry claims it must bleach these oils white because of Federal laws. The real reason is when cottonseed oils are turned into fat they become gray; and when soybean oils are turned into fat they become green. So to have a uniform color the oleo manufacturers must bleach out the gray and green colors. It is impossible to produce a natural yellow oleomargarine from domestic oils.
Butter, on the other hand, is always yellow, although at some seasons of the years it is less yellow than at others. When color is added to butter it is for the sake of uniformity, not for the purpose of making it look like some other product. In tests run at the University of Wisconsin on four commercial milk supplies, it was found that the natural color of butter is at its lowest ebb during March and April. Even at this low ebb, it never went below 2 Lovibond tintometer units. Oleomargarine becomes subject to the 10-cent color tax when its exceeds 1.6 Lovibond units of yellow and red combined. Yours truly,
EARL J. EVANS, President
ARIZONA DAIRYMEN'S LEAGUE,
Phoenix, Ariz., May 15, 1948. Hon. EUGENE MILLIKEN,
Senate Finance Committee, Washington 5, D. C. DEAR SENATOR MILLIKEN: The Arizonia Dairymen's League wish to go on record at the Finance Committee hearing on the repeal of the oleo tax as having no objection to the repeal of the tax if a means can be devised whereby butter can be protected from the fraudulent use of oleo and that oleo shall be made to sell on its merits alone and not trade on the merits of butter. We are, Respectfully yours,
HAROLD BOWLES, Executive Secretary.
STATEMENT SUBMITTED TO THE FINANCE COMMITTEE OF THE UNITED STATES
SENATE BY THE ARIZONA MILK PRODUCERS OF PHOENIX, ARIZ., IN OPPOSITION TO H. R. 2245
The Arizona Milk Producers is a cooperative marketing association with about 750 dairy farmer members whose combined dairy herds number about 8,000 producing cows. About 60 percent of the milk produced by them is utilized as fluid milk and cream and the remainder is marketed as butter and other manufactured milk products.
The board of directors of this association is on record as unanimously opposed to the removal of Federal restrictions on the use of yellow color in oleomargarine prior to sale to the ultimate consumer. Our opposition is based on the following grounds:
BUTTER AND OLEOMARGARINE ARE BASCALLY DIFFERENT PRODUCTS
Notwithstanding any alleged or apparent similarity between butter and oleo, the raw materials from which they are manufactured are different and the standards observed in the handling of the raw materials are different. The production of milk and cream is controlled by sanitary ordinances, both local and State, and butter which enters into interstate commerce must be manufactured from milk or cream meeting stringent requirements of the Pure Food and Drug Administration, among these are that milk and cream be free from foreign matter of any kind. Removal of foreign matter by filtering and purification by heating do not make milk or cream containing foreign matter acceptable to the Pure Food and Drug Administration. Oleo, on the other hand, is produced from vegetable seeds, in the handling of which no sanitary controls are exercised. Chemical preservatives are prohibited in butter, but permitted in oleo. Artificial flavoring is prohibited in butter, but permitted in oleo. The addition of commercial vitamins is prohibited in butter, but permitted in oleo. The only materials entering into the manufacture of oleo which meet the standards of butter manufacture are the skimmed milk and salt used. Because of these differences, butter necessarily costs more to produce than oleo.
These basic differences in the nature of the two products make it imperative, in the interests both of consumers and producers, that the products be marketed in such form that the consumer may know which product he is getting, and that the inferior, and cheaper oleo may not by deception be substituted for the higher priced and superior product, butter.
SIMILARITY OF THE PRODUCTS IS NOT ACCIDENTAL
It is not by accident or coincidence that such similarity as exists between butter and oleo occurs. Butter is a natural product resulting from the simple mechanical operation of churning cream or milk. Such artificial coloring as is used in butter making is added to secure a unform color throughout the year, and not to make it look like some other product. The practice was adopted long before oleo was developed. Oleo is produced by highly involved and technical manufacturing processes, every part of which is directed toward making a product which will resemble butter as closely as possible. The only purpose of adding color to oleo is to make of it a better imitation of butter.
FRAUDULENT SALES OF COLORED OLEO HAVE OCCURRED IN THE PAST AND WILL BE MORE
FREQUENT IF RESTRICTIONS ARE REMOVED
Past experience has shown that prior to the placing of restrictions on the use of yellow coloring in oleo, deceptive substitution and fraudulent sales of oleo for butter were common. At that time oleo did not simulate butter as closely in texture and flavor as it now does. Deception would therefore be easier now than at that time. Even since the enactment of restrictive legislation now in force, fraudulent substitution is by no means uncommon.
MARKING AND LABELING AND THE PURE FOOD AND DRUG LAWS WILL NOT PREVENT
FRAUDULENT SALES OF OLEO FOR BUTTER
With restrictions removed, it is reasonable to suppose that colored oleo packed in bulk will be made and sold. Such packages, if properly labeled, could be shipped to any place in the United States without violation of Federal pure food and drug laws. Unscrupulous operators could, and we believe would, buy and repack such oleo in forms and wrappers which would confuse and deceive the purchaser. Unless these operations crossed State lines, the pure food and drug laws would not be applicable. In Arizona we have no special legislation covering traffic in oleo. Control of deception and fraud in the sale of oleo for butter under the general statutes relating to fraud would, we believe, be extremely difficult.
IMPROVED BUSINESS ETHICS WILL NOT CONTROL THE SITUATION
It is only necessary to review the history of bootlegging during prohibition and the more recent experience with black-marketing under OPA to realize that there are plenty of people who would sell oleo for butter if there were attractive profits in the operation.
PRESENT TAX ON COLORED OLEO NOT ADEQUATE
At the time the present tax of 10 cents per pound on colored oleo was established, the general price level of all foods, including butter and oleo, was much lower than at present, and the 10-cent tax was an effective deterrent to the manufacture of colored oleo. Increased prices of both oleo and butter have made the 10-cent tax a much less effective barrier, and the tax should be increased proportionately to the increase in prices or, preferably, the addition of yellow color before sale to the consumer, prohibited.
COLUMBUS, OHIO, May 18, 1948. Hon. EUGENE D. MILLIKIN, Chairman, Senate Committee on Finance,
Senate Office Building, Washington, D. C.: We understand Mr. Joseph Fichter, master of Ohio Grange, in testimony before your committee indicated or inferred that the four Ohio margarine manufacturers are opposed to H. R. 2245 because if H. R. 2245 becomes law we could not make or sell colored margarine until the present Ohio law is repealed. We strongly resent Mr. Fichter's statement insofar as the position of this company is concerned as he had no authority or right in any way to testify to our views in this legislation. Further understand that Mr. Fichter failed to mention or call to the attention of the committee that at the present time, pursuant to the constitution of Ohio, a law is being initiated by petition to permit the manufacture and sale of yellow margarine in Ohio. The Capital City Products Co. is 100 percent in favor of H. R. 2245 and we respectfully request that you place our telegram in the record.
THE CAPITAL CITY PRODUCTS Co. By F. J. CURTIN.
CHALLENGE CREAM AND BUTTER ASSOCIATION,
Los Angeles 12, Calif., May 12, 1948. Hon. EUGENE D. MILLIKIN, Chairman, Senate Finance Committee,
Senate Office Building, Washington, D. C. DEAR Mr. MILLIKIN: We have no quarrel with oleomargarine so long as it is sold for what it is-a vegetable compound distinguished in some manner which will eliminate deception of consumers who wish butter.
Records of the Commissioner of Internal Revenue are replete with a multitude of instances where oleomargarine has been colored a butter yellow and sold as butter. The surest way to prevent fraud and deception is to have the two products entirely different in color. The natural color of butter is yellow since the beginning of time, though varying in some degree due to feeds at various times of the year. It, therefore, does not seem proper that butter be some other color to bring about this distinction between oleomargarine and butter to prevent fraud and deception.
Butter is a natural healthy food product, yet here we find a vegetable compound now being fortified with vitamins plus the addition of butter flavoring, preservatives, and coloring, so that it cannot be distinguished from natural butter. Certainly the existing regulations covering oleomargarine have not been detrimental to its use. Since 1941 sales of oleo have more than doubled and retail outlets have increased more than 64 percent, and all mostly at the expense of butter.
Butter was practically dealt a knock-out blow under OPA. Under this regulation, ceilings on every other dairy product return a higher income to dairy farmers than butter. Demands by Government were large for all dairy products and as a consequence only a limited amount of butter was produced—and that which was produced, a sizable portion had to be set aside for Government. Consumers though desiring butter in many instances could not purchase the same and this condition resulted in a heyday for the oleomargarine interests. Now under pending legislation before your committee it is proposed to complete this knockout by permitting oleomargarine to masquerade as butter.
Repeal of colored oleomargarine regulations, and it can be expected this will be followed by widespread competition of this low-cost imitation of butter, would seriously damage butter markets, as butter is a basic dairy commodity, and every other dairy product would likewise be affected. To assure consumers an ample supply of fluid milk and other dairy products at all times of the year the cow population must be maintained to assure a plentiful milk supply at all times of the year. Milk production varies between the so-called flush season and the slack season, when the cows' milk flow declines. Therefore, during the flush season there is an excess of production and such excess traditionally is churned into butter. Butter, is, therefore, the balance wheel in the entire dairy economy. It can easily follow that a decline in butter income to the dairy farmer results to where it is unprofitable for the dairy farmer to produce, the cow population will immediately decrease and in time result in a shortage of milk production. This condition would no doubt cause higher prices of all dairy products. The present tax on oleomargarine if discontinued would not reduce the price of oleomargarine, but might on the contrary result in higher prices, for by supplanting butter, oleomargarine interests no doubt will attempt to obtain for themselves some portion of the now existing differential between butter and oleomargarine.
We have no objections to the repeal of taxes on uncolored oleomargarine or the repeal of occupational taxes. We do plead, however, for the continuance of the tax on butter-colored oleomargarine to enable consumers desiring to purchase butter assurance that they are purchasing butter and not be subject to possible deception and fraud. Very truly yours,
L. E. EVANS, General Manager.
CINCINNATI, OHIO, May 19, 1948. Senator EUGENE D. MILLIKIN, Chairman, Senate Finance Committee,
Senate Office Building, Washington, D. C.: Respectfully request that it be included in official record resent as absolutely untrue statement of Joseph Fichter, master of Ohio Grange, before Senate Finance Committee today that four Ohio margarine manufacturers are opposed to repeal of Federal margarine taxes because they cannot manufacture yellow margarine in Ohio under State law. Truth is all four Ohio manufacturers are collaborating with Ohio consumers to end dictatorship of dairy lobby in Ohio and confidently expect repeal of Ohio margarine laws by referendum petitions being circulated and ballots within next year and half. For this reason all four Ohio margarine manufacturers favor repeal Federal margarine taxes by H. R. 2245.
THE CHURNGOLD CORP.
COLORADO DAIRY PRODUCTS ASSOCIATION, INC.,
Denver 2, Colo., May 14, 1948. Hon. EUGENE D. MILLIRIN,
Senate Office Building, Washington, D. C. DEAR SIR: Now that the oleomargarine tax-repeal legislation bill has been referred to the Finance Committee of the Senate it will no doubt be brought to the floor soon for discussion and action.
As an association we should again like to ask your consideration of the dairy industry in this State, representing 25,000 dairy farmers and approximately 200 processors, manufacturers, and distributors.
The writer feels that the color yellow should be definitely retained as the identifying color of butter. Nature provided for it and made it that way.
The creamery-butter industry of Colorado feels that oleomargarine should be sold for the product it is, on its own merits, uncolored, or at least not colored yellow.
The present 10-cent tax per pound should be retained. The dairy industry of
AMMON BRADSHAW, Executive Secretary.
STATEMENT OF COMMUNICATIONS WORKERS OF AMERICA
The old adage, “If you can build a better mouse trap than your neighbor, the world will beat a pathway to your door,” apparently no longer holds true, at least with respect to the margarine-producing industry. Here we have an example of an American industry which has been able to produce a commodity, at a relatively low cost, necessary and desirable for healthful living, and Congress has placed barriers in the way of its sale because this product happens to resemble one already on the market.
The Communications Workers of America, which represents 230,000 telephone workers in 42 of the United States, is here to protest this unsound and uneconomic action. Approximately 70 percent, or 163,000, of the telephone workers represented by the CWA, are presently housewives or potential housewives who have more than just an academic interest in the question presently the subject of these hearings. We feel strongly that Congress has become a party to one of the most serious restraints of trade in history, which has and continues to result in considerable hardship to the American housewife.
We are cognizant of the fact that in this day of atomic energy, European recovery plans, and Palestine partitions it is difficult to muster much interest or enthusiasm in the comparatively minor problem of colored or uncolored margarine, of 10 cents or one-fourth cent or no tax on one of the many food products available to the average American shopper. But let us see if we cannot communicate to you simply and concisely what we consider the basic issue involved in this long-standing controversy and why the CWA among many other organizations and individuals feels it important that Federal taxes on margarine be repealed. We know that others have demonstrated beyond a reasonable doubt that modern margarine is as nutritious as its table-spread rival, butter. We need not, we think, dwell additionally on this subject. The early Supreme Court decisions which upheld State and Federal taxes on colored margarine based their conclusions primarily on the thesis that State and Federal tax authority could be used to protect the consuming public from fraud. It was argued that the margarine producers would try to pass off margarine as butter if they were permitted to color it. This unfounded, illogical line of reasoning persists today despite the existence of the Pure Food and Drug Act which specifically provides for adequate labeling. Is there anyone who sincerely believes that the average housewife would think she was buying butter, when she was actually getting margarine just because the color was yellow? Does the average housewife think she is getting salt when she wants sugar, just because the two products are white and have similar consistencies?
What, then, are the real purposes of these prohibitive taxes, license fees, and prohibitions on the sale and manufacture of colored margarine? They are barriers to progress. And Congress must carry on its conscience a large share of the responsibility for impeding the march of inventive genius in the dairy industry.
It will not take much prompting, we are sure, to remind Members of Congress of recent hearings which took place during which a well-known labor leader was called to explain his union's ban on phonograph recordings. Members of Congress and the public frowned upon artificially preventing the fruits of technological improvement from accruing to the people of the United States.
Workers in the telephone industry daily face technological unemployment due to impending mechanization of long-distance telephone calls. What would Congress' attitude be if the CWA attempted to prevent displacement of its workers by machines? What would Congress' answer be, if we stated that we wanted Congress to prohibitively tax all dial conversion machines to be installed by the telephone industry-in order to safeguard the jobs of telephone workers?
Yet the present taxes on margarine similarly prevent advanced scientific methods of benefiting the public. Butter as a cheap table spread is as obsolete as the old-fashioned ice box. The margarine industry has perfected a rival product which can be sold at less than half or a quarter of the price of butter. But Congress has become the instrument of the past which is preventing this cheaper product from reaching consumers in the form they desire it. It is the very essence of the American free enterprise system that inventive genius is rewarded by a free market in which to sell improved products-except, of course, for margarine.